The employment rate is at a record high of 76%, but the earnings of those in work are still yet to recover to their pre-2008 levels after adjusting for inflation – marking an unprecedented ‘lost decade’ of earnings growth. This is closely linked to an almost complete lack of productivity growth over that period. Productivity is just 3% higher than it was in 2008, or 19% lower than it would have been had the normal pre-crisis rate of productivity growth continued.
These trends have accelerated a large shift in the nature of poverty and low income in the UK, away from the unemployed and elderly and towards the working poor. The majority of all people below the official poverty line are now either in paid work themselves or sharing a household with someone who is. This is the backdrop to many of the most pressing domestic policy debates, and high-profile policies including the minimum wage, which looks set once again to be the subject of an election battle.
Changes to real median earnings, weekly and hourly, since 2008
Source: Authors’ calculations using ONS ASHE Time Series Estimates, Table 1, 2019 and ONS series L522 (CPIH index All Items). Earnings measures in April of each year.
